5.35 The Financial Services and Markets Act 2000 (FSMA) regulates activities including dealing, managing, advising and arranging deals in investments and operating collective investment schemes. The list of investments includes shares in any corporate body and units in a collective investment scheme which includes participations in certain unincorporated JVs.
5.36 Section 19(1) of FSMA states that:
● "No person may carry on a regulated activity in the United Kingdom, or purport to do so, unless he is:
a) an authorised person; or
b) an exempt person."
5.37 Under the FSMA (Exemption) Order 2001 certain persons are exempt from this general prohibition, but only in respect of certain specified regulated activities. Exemptions, some wider than others, have been granted to government organisations, local authorities, housing associations and registered social landlords, amongst others.
5.38 If a JV (the shares or other rights of participation in which are investments subject to FSMA) wishes to make a financial promotion then the JV would normally need to have the consent of the communication approved by a FSMA authorised person. A financial promotion is any invitation or inducement to engage in investment activity.
5.39 Legal advice should be sought as to the specific impact of FSMA and related regulatory requirements on the formation and activities of the proposed JV vehicle and the acquisition and transfer of shares and other rights of participation in the proposed JV vehicle. A bona fide commercial trading JV however (where both parties have day to day management control) is unlikely to be covered by FSMA.